From next May, airline passenger duty (APD) will no longer apply to children under the age of 12. The concession will be extended to under 16s from 2016, chancellor George Osborne said during the Autumn Statement.
The amount saved depends on where passengers travel, but the changes mean a family of four would save £26 on a flight to Europe and £142 on one to the US, according to the Treasury.
The move follows Osborne's announcement in March that two APD bands would be scrapped, after intense industry pressure to ditch the tax entirely.
Passenger duty is still too high, and makes the UK less attractive for business and tourism compared to our European neighbours
Carolyn McCall, easyJet's chief executive officer, called for the "complete abolition" of APD.
She said: "We support anything which makes travel easier and more affordable for our passengers and we hope this is the first step towards the complete abolition of APD.
"The UK currently has the highest air passenger taxes in the world. APD is tax on travel and has a proven, negative impact on UK tourism, investment and business activity.
"Abolishing APD would boost the UK economy and pay for itself by increasing revenues from other sources."
A PwC report commissioned last year by easyJet, British Airways, Virgin Atlantic and Ryanair suggested APD costs the UK economy 0.45% in GDP each year, and almost 60,000 jobs up to 2020.
James Stamp, KPMG's global head of aviation, said: "Passenger duty is still too high, and makes the UK less attractive for business and tourism compared to our European neighbours."
The changes mean airlines will have to refund passengers with flights booked after 1 May next year.
Nathan Stower, chief executive officer for the British Air Transport Association trade body, pointed out the "practical difficulties" of refunding flights in just six months.
He said: "Abolishing APD for children flying economy is an early stocking filler for families who save hard for holidays and visits to friends and relatives, which will also boost UK tourism.
"However, introducing the first change for children under 12 in May presents significant practical difficulties.
"The industry has always said that changes to APD should have at least a 12 month lead in time due to advance bookings."
A spokesman for the Treasury said the government was "already working" with airlines to help refund passengers.